Investment for Competitive Power Plants under Uncertainty of Allocation Scheme

• Oda Junichiro

  Systems Analysis Group, Research Institute of Innovative Technology for the Earth (RITE)

• Takashima Ryuta

  Faculty of Social Science, Chiba Institute of Technology

Bibliographic Information

Other Title

• キャップ割当スキームの不確実性が電源投資に与える影響評価
• キャップ ワリアテ スキーム ノ フカクジツセイ ガ デンゲン トウシ ニ アタエル エイキョウ ヒョウカ

Abstract

In this study we focus on power generation replacement and CCS investment as a substitute for an aged coal-fired power plant under an emission trading system. In this analysis carbon price, gas price and free allocation are explicitly uncertain. Using a real options approach we evaluate the thresholds between “waiting” and “investment right now”. The results indicate that it requires substantially higher carbon price for early CCS diffusions. For example, in the case of middle-range gas price (around US$8/GJ), US$65/tCO2 is not sufficiency to invest CCS right now. In addition allocation uncertainty makes it more difficult to diffuse CCS in an early stage.

Journal

• Journal of Real Options and Strategy

  Journal of Real Options and Strategy 4 (1), 47-60, 2011

  The Japan Association of Real Options and Strategy

Keywords

• Carbon capture and storage
• cap and trade
• free allocation
• replacement
• aged coal-fired power plant

Details

• CRID: 1390282680294595072
• NII Article ID: 130000670600
• NII Book ID: AA12351380
• DOI: 10.12949/realopn.4.47
• ISSN: 18841635
• ISSN: 18815774
• NDL BIB ID: 11025636
• Web Site: https://ndlsearch.ndl.go.jp/books/R000000004-I11025636
• Web Site: https://www.jstage.jst.go.jp/article/realopn/4/1/4_1_47/_pdf
• Text Lang: en
• Data Source:
  • JaLC
  • NDL
  • Crossref
  • CiNii Articles
  • KAKEN
• Abstract License Flag: Disallowed